About Dangote Cement

Dangote cement is one of the subsidiaries of Dangote Group. Dangote group was founded by Aliko Dangote, a Nigerian Business magnate and Billionaire (in dollar…lol…). The Dangote Group was established as a small trading firm in 1977. Today, it is a multi-trillion naira conglomerate with many of its operations in Benin, Ghana, Nigeria, and Togo.

Dangote group includes subsidiaries such as the Dangote Sugar Refinery, Dangote cement and Dangote flour. Dangote Sugar refinery dominates the sugar market in Nigeria, with its largest customers being the soft drink companies, breweries and confectionaries. Dangote sugar refinery is the largest refinery in Africa, and the third largest in the world with an annual production of 800,000 tonnes of sugar. Dangote cement is a Nigerian multinational publicly traded cement manufacturer headquartered in Lagos. Activities carried out by Dangote cement include the manufacture, preparation, import, packaging, and distribution of cement and related products across the African continent.

Dangote cement is the largest indigenous producer of cement in Nigeria, second only to Larfarge Holcim, a swiss based global building materials and aggregate company. Dangote Flour commenced operations in 1999, a subsidiary of Dangote group with three of its own subsidiaries too (Dangote Agro sack’s Limited, Dangote Pasta Limited, and Dangote Noodles limited).

Well, that was a brief introduction to Dangote group. Our focus for today is on Dangote Cement and how its expansion raked in higher profits for the company. Dangote Cement has been aggressive with its expansionary plans, with projects including new integrated cement plans in Senegal, South Africa, Ethiopia, Zambia, Tanzania, Congo, Kenya, Nepal.

Dangote Cement has received much recognition over the past few years, including recently being named the most outstanding company of the year by the Abuja Chamber of Commerce and Industry (ACCI) for its contribution to the Nigerian Economy. Other recognitions include being listed as part of the top Global 2000 Companies by Forbes; a feat no other Nigerian company has been able to replicate.

Dangote Cement FY financial review

Dangote Cement posted profits of NGN181.32 billion in 2015, an increase of 14 % from the previous year figure of NGN159.5 billion. The amazing thing about this profit report is that Dangote cement was able to weather the storm and overcome a recessionary period in Nigeria that started in the 3rd quarter of 2015. This recessionary period was aided by the global oil supply glut that sent oil prices tumbling, and also the weakening naira. Also in the year of review, revenue increased by 26% from NGN391.639 billion to NGN491.725 billion; this indicates that that their expansionary project in Africa is bringing positive returns to the company. The company attributed its revenue growth to higher contributions from existing operations in South Africa and Ghana as well as maiden operations in Senegal, Cameroon, Ethiopia, and Zambia.

A major factor that influenced the increase in profit for Dangote cement was its decision to cut prices in Nigeria in September 2015. Dangote cement cut prices by 300 Naira during this period, and it was declared that the price cut helped Dangote Cement override the impact of the country’s economic challenges caused by falling oil prices and the devaluation of the Naira. Dangote took the decision to cut prices in order to boost consumption, compete with imports, and make it attractive for export to other countries; this paid off because fourth quarter sales in 2015 rose by 36% q/q. “New factories performed very successfully across Africa, gaining significant market share against long-established incumbents,”. “In our home market of Nigeria we increased sales by 3.2% against the worst economic crisis the country has faced in many years, which demonstrates that the Nigerian market is very robust,” said Van der Weijde (Chief Executive Officer of Dangote Cement).

Van der Weijde also said in the statement “We have not only increased revenues and profits but by successfully entering new markets, reducing our dependence on expensive fuels and further improving our corporate governance, we have very substantially de-risked the business, reduced net debt and improved the quality of our earnings,”. “We have succeeded in new markets, proving that our business model works throughout Africa and we’ve created a strong foundation for the next wave of expansion in Africa’s exciting growth markets and beyond,”.

This is quite true because based on the financial statement, revenue from south Africa alone amounted to 61.208 billion Naira in 2015, an increase of 340% from the previous year’s revenue of 13.910 billion Naira. Operating profit from south Africa also rose from a meagre 56 million in 2014 to 8.602 billion in 2015.